Archive for the 'Competition Bureau' Category
Jeff Gray and Tara Perkins at the Globe have written an interesting note on criticism of the Competition Bureau’s recently launched merger registry (see: Competition Bureau’s Mergers List Panned).
For the first transactions disclosed by the Bureau in its new merger registry see: Monthly Report of Concluded Merger Reviews. For more about Canadian merger control see: Merger Control. For the Canadian Bar Association’s comments on the proposed registry last fall see: Proposed Merger Registry.
The International Antitrust Law Committee of the ABA has published their March 2012 “Hot Topics” Newsletter entitled “Updates to the Canadian Merger Review Process” (see: Updates to the Canadian Merger Review Process).
Abstract:
“On January 11, 2012, the Canadian Competition Bureau published a revision of its Merger Review Process Guidelines. The revised Guidelines set out the Bureau’s approach to the merger review process under the Competition Act, which was most recently articulated in 2009 following the significant changes to the merger notification provisions which conform more closely to the ‘second request’ system employed in the United States.
The revised Guidelines represent refinements rather than wholesale changes to the process articulated in 2009, and are principally concerned with the procedures to be followed when responding to a Supplementary Information Request (‘SIR’)”
On March 6, 2012, a Scheduling Order was issued in Commissioner of Competition v. Air Canada/United, one of two current contested merger cases before the Competition Tribunal.
Hearings are scheduled to begin November 13, 2012.
A few days ago, we posted a short note on the Competition Bureau’s announcement that five companies and three individuals were found by the Ontario Superior Court of Justice to have violated the Competition Act in relation to a deceptive marketing operation (see: Advertising Update: $9 Million Penalty and Restitution Obtained in Deceptive Marketing Scheme).
We thought we would post a few more observations about this rather significant case following the issuance of the decision by the Ontario Superior Court.
Facts
The Competition Bureau sought orders for restitution and administrative monetary penalties or “AMPs” (essentially civil fines) in relation to alleged deceptive marketing by a group of related companies that included Yellow Page Marketing B.V., Yellow Publishing Ltd., Yellow Data Services Ltd., Yellow Business Marketing Ltd. and several individual defendants (none related to the Yellow Pages Group (“YPG”), well known and reputable in Canada).
The Bureau alleged that this group of companies misled thousands of Canadian businesses, individuals and organizations to pay more than $2,000 each for “agreed upon” services on the assumption that the target companies were merely updating existing records to obtain free Google advertising. In fact, fine print disclaimers disclosed that the targets were actually signing new two-year contracts.
While unrelated to the YPG, the defendants registered 13 Internet domains for websites that included highly similar trade-marks, colours and designs used by the YPG. The defendants also sent faxes to businesses, individuals and organizations that, according to the Court, were “designed to mislead existing or potential YPG customers” into paying $2,856 to them and which included designs that highly resembled the YPG “Walking Fingers” logo.
Companies responding to the faxes received invoices, which, if not paid, were followed by more invoices, reminder notices or letters.
Law
The Court considered the facts of this case under section 74.01 of the Competition Act (the general civil misleading advertising section of the Act).
Generally speaking, the misleading advertising provisions of the Competition Act prohibit false or misleading statements to the public that are made to promote products (including services) or business interests and that are materially false or misleading (i.e., likely to cause an ordinary or average consumer into purchasing a product or otherwise altering their conduct).
The Court reviewed the relevant law under the general misleading advertising provisions of the Act, including the test for materiality, the “general impression test” (the general impression of a claim is relevant under both the criminal and civil misleading advertising provisions in addition to its literal meaning), the fact that the general misleading advertising provisions apply to claims relating to both products or “any business interest” and the law relating to fine print disclaimers.
With respect to materiality, the Court held:
“The false or misleading representations made by the respondents were material. They were intended to deceive and did, in fact, deceive many Canadian businesses and individuals into believing that they were dealing with YPG, when they signed and returned the Unsolicited Faxes and sent payment to the respondents. Materiality of the false or misleading representations is further evidenced by the fact that a majority of complainants stated that they would never have ordered the service by returning the Unsolicited Faxes had they known that the respondents were unaffiliated with YPG and/or would never have paid the respondents invoices or reminder notices had they not believed that they had been sent by YPG.”
With respect to the fine print disclaimers, the Court held:
“The fact that the fine print of the Unsolicited Faxes stated that returning them would bind the recipient to a two year contract does not reduce its false or misleading nature. The fine print did not clarify that the Unsolicited Faxes had not been sent by YPG and the disclosure was insufficiently prominent.”
With respect to the meaning of “business interest” in section 74.01, the Court construed this phrase broadly holding:
“Similar misrepresentations appear in the respondents’ domain names, invoices, reminder notices and letters sent by the respondents. Although the respondents argue that collection efforts after the contract had been completed were not to increase sales, the relevant provision of the Competition Act refers to promoting “any business interest” and not just sales. The phrase ‘business interest’ must be given a wide meaning and collecting money, and threats made in relation to collection efforts, constitute promotion of the respondents’ business interests.”
The Court also found the defendants’ domain names, invoices, reminder notices and letters to be misleading and rejected the defendants’ argument that a due diligence was available.
Under the penalty provisions of the civil misleading advertising sections, a limited defense is available to the corrective notice, administrative monetary penalty and restitution provisions where a person establishes that they exercised due diligence to prevent the reviewable conduct from occurring.
On March 8, 2012, the Competition Bureau announced that another individual pleaded guilty under section 45 of the Competition Act to fixing the price of gasoline in the ongoing Quebec gasoline price-fixing cartel (see: Individual Fined in Gasoline Price-fixing Cartel).
This investigation is the largest criminal investigation in the Bureau’s history and has been active for about two years.
In making the announcement, the Bureau said:
“The accused, Robert Murphy (now retired), was a territorial manager employed by Sonic. He was sentenced today to pay a fine of $7,500.
Charges were laid in June 2008 and July 2010 against 38 individuals and 14 companies accused of fixing the price of gas at pumps in Victoriaville, Thetford Mines, Magog and Sherbrooke, Quebec. As of today, 22 individuals and six companies have pleaded guilty in this case, with fines totalling over $2.8 million. Of the 22 individuals who have pleaded guilty, six have been sentenced to terms of imprisonment totalling 54 months.”
The Competition Bureau announced earlier today that Alison Tait has been appointed the new Deputy Commissioner, Civil Matters Branch.
In making the announcement, the Bureau said:
“Ms. Tait has extensive experience in industrial policy, program development, and international business development, both in Canada and the United States, and is currently Director General of the Automotive and Transportation Industries Branch at Industry Canada. She has developed and implemented a number of initiatives aimed at ensuring the long-term competitiveness of the automotive sector in Canada.
She has previously served as Industry Canada’s Director responsible for Tourism, the 2010 Olympics, and Trade & Investment. Ms. Tait has also worked at the Canadian Consulate General in Boston as an Investment Counsellor, where she was responsible for attracting foreign direct investment and venture capital to Canada.”
The Competition Bureau is organized into a number of civil and criminal related “branches” consisting of: Civil Matters, Compliance and Operations, Criminal Matters, Economic Policy and Enforcement, Fair Business Practices, Legal Support, Legislative and International Affairs, Mergers and Public Affairs.
The Civil Matters Branch is responsible for administering and enforcing the civil provisions of the federal Competition Act, which include abuse of dominance (sections 78 and 79), refusal to deal (section 75), exclusive dealing / tied selling / market restriction (section 77) and price maintenance (section 76).
On March 2, 2012, a new tentative hearing date of October 17, 2012 was set in the Pro-Sys and Sun-Rype indirect purchaser price-fixing class action cases before the Supreme Court of Canada (see: Pro-Sys Consultants Ltd. (docket) and Sun-Rype Products Ltd. (docket)).
In Pro-Sys, a majority of the British Columbia Court of Appeal set aside an earlier Supreme Court of British Columbia decision granting certification and dismissed the action on the basis that the representative plaintiffs, as indirect purchasers, had no cause of action maintainable in law.
In Sun-Rype, the British Columbia Court of Appeal similarly set aside an earlier Supreme Court of British Columbia decision granting certification for indirect purchaser plaintiffs, holding that they had no cause of action and remitted the application to the trial court for consideration with respect to the direct purchaser plaintiffs.
The Globe and Mail posted a short interview with the Commissioner of Competition earlier today by Steve Ladurantaye.
Among the topics discussed by the Commissioner included misleading advertising, the perception that the Competition Bureau only pursues high profile deterrent setting cases, the Bureau’s approach to case selection and its approach to remedies.
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
